While Democrats were busy passing the latest COVID stimulus package that will provide relief to millions of Americans through Congress, Republican leaders were pleased to introduce their own legislation: a renewed attempt at repealing the estate tax.
The legislation was unveiled on Tuesday by Senators John Kennedy (R-Louisiana) and John Thune (R-South Dakota) and has been co-sponsored by 24 other Republican senators, or about half of all Senate Republicans, including Minority Leader Mitch McConnell (R-Kentucky), according to a Kennedy press release. Rep. Jason Smith (R-Missouri) has also introduced similar legislation in the House.
The federal estate tax’s current top rate is 40 percent, but thanks to exemptions that grow every year, an estate in 2021 would have to be worth $11.7 million for individuals and $23.4 million for married couples before the estate tax kicks in. The exemption was previously around $5 million but was doubled by then-President Donald Trump in 2018.
Because the threshold is so high, an estimated less than 0.1 percent of estate tax returns will pay the federal estate tax for 2020. In other words, Republicans are fighting for a repeal of a tax for the richest 0.1 percent of dead people.
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Republicans are touting this legislation as helpful for families, especially farmers, who pass down their homes and property to their children. The repeal of the estate tax, in similar GOP attempts past, has had the endorsement of the conservative American Farm Bureau (AFB).
But, as the LA Times points out, the estate tax also only applies to the biggest and richest of farming families. The AFB estimated that, in 2020, a farm would have to be about 3,700 acres to be subject to the estate tax. Meanwhile, the average farm, according to the Department of Agriculture, is 444 acres.
“Couching the estate tax repeal as a benefit for America’s valiant business and farm owners is a scam. The largest category of assets in estates by far is publicly traded stock,” wrote business reporter Michael Hiltzik for the LA Times. “Repealing the estate tax would be a massive handout to rich families, enabling them to concentrate their wealth to an extent the Founding Fathers found inimical to society.”
President Joe Biden proposed a host of increased taxes on the rich on his campaign trail, including reducing the tax exemption on estate taxes drastically to $3.5 million for individuals, going back not only to pre-Trump levels but pre-2011 levels. Though he has not endorsed a wealth tax, other Democrats and progressives like Sen. Elizabeth Warren (D-Massachusetts) have been working on a wealth tax on the ultrarich to level the playing field and help raise funds for the federal government.
Republicans like to claim that they’re the party of the working class: As MSNBC points out, just a few weeks ago, Sen. Ted Cruz, a co-sponsor of the estate tax repeal, said, “The Republican Party is not just the party of country clubs. The Republican Party is the party of steel workers, construction workers, pipeline workers, police officers, firefighters, waiters, and waitresses.”
While Republicans were unveiling this legislation this week, Democrats were negotiating and voting through the $1.9 trillion American Rescue Plan, which, by some estimates, is expected to lift 16 million out of poverty this year. This stimulus plan, which has sorely needed relief for Americans in the form of $1,400 relief checks and tax credits for the middle and lower classes, got zero Republican votes.
In fact, Republicans (and some notable centrist Democrats) fought tooth and nail through the stimulus negotiations to get the $1,400 checks and $15 federal minimum wage out of the bill — the same minimum-wage proposal that would be a huge boon to the servers that Cruz says he represents.
Though the estate tax currently raises much less than it could since the exemption is so high, the Office of Management and Budget has still projected that estate and gift taxes will raise $205 billion from 2019 to 2028. That’s enough to cover the $54 million that the Congressional Budget Office estimated a $15 minimum wage would add to the deficit over a similar time period more than 3.5 times over.